Correlation Between Neuberger Berman and IShares Small

Can any of the company-specific risk be diversified away by investing in both Neuberger Berman and IShares Small at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Neuberger Berman and IShares Small into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Neuberger Berman Energy and iShares Small Cap, you can compare the effects of market volatilities on Neuberger Berman and IShares Small and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Neuberger Berman with a short position of IShares Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neuberger Berman and IShares Small.

Diversification Opportunities for Neuberger Berman and IShares Small

0.28

Correlation Coefficient

Neuberger Berman  IShares Small

Modest diversification

The 3 months correlation between Neuberger and IShares is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Neuberger Berman Energy and iShares Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Small Cap and Neuberger Berman is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Neuberger Berman Energy are associated (or correlated) with IShares Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Small Cap has no effect on the direction of Neuberger Berman i.e., Neuberger Berman and IShares Small go up and down completely randomly.

Pair Corralation between Neuberger Berman and IShares Small

Given the investment horizon of 90 days Neuberger Berman Energy is expected to generate 1.04 times more return on investment than IShares Small. However, Neuberger Berman is 1.04 times more volatile than iShares Small Cap. It trades about 0.08 of its potential returns per unit of risk. iShares Small Cap is currently generating about -0.1 per unit of risk. If you would invest  3,155  in Neuberger Berman Energy on December 30, 2024 and sell it today you would earn a total of  182.00  from holding Neuberger Berman Energy or generate 5.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Neuberger Berman Energy  vs.  iShares Small Cap

Neuberger Berman Energy

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Neuberger Berman Energy are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Neuberger Berman is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

iShares Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Small Cap has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Etf's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the ETF venture institutional investors.

Pair Trading with Neuberger Berman and IShares Small

The main advantage of trading using opposite Neuberger Berman and IShares Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neuberger Berman position performs unexpectedly, IShares Small can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in IShares Small will offset losses from the drop in IShares Small's long position.

The idea behind Neuberger Berman Energy and iShares Small Cap pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.